The growth and adoption of wide-area data networks such as the Internet have enabled merchants to offer a number of new services to consumers. These services often center around data manipulation and storage, and can be provided to a large number of consumers without significant setup or operational expense. As a result, merchants often provide these services to consumers gratis, and look to alternate revenue sources such as advertising and data aggregation (that is, collection and sale of data about consumers' preferences and habits) in hopes of creating a viable business. Unfortunately, operating a service business in this manner engenders a feeling of entitlement to future free service among consumers. Consequently, merchants find it difficult to provide new services which do require significant investment or operating capital, because consumers are reluctant to try a new service that is not free, yet many services cannot economically be provided for the amount of money that can be earned by advertising or data aggregation.
Merchants have commonly addressed this problem by simply offering the new, expensive-to-provide service gratis (and at a financial loss) during an introductory period, in the hope that consumers will find the service valuable or indispensable and continue to use it when the introductory period terminates and the service must be paid for. However, this all-or-nothing approach does not work well given consumers' feelings of entitlement to free services; even if the new service is convenient or useful, a consumer faced with the choice to “pay up” or get out will often grumble and stop using the service, and may become annoyed enough to abandon the merchant's other services as well.